President Vladimir Putin Attempted to stop using US dollar. Commodities such as wheat, gold, and oil are typically traded around the world in US dollars- the world’s reserve currency.
Russia’s Attempts To Stop Using US Dollar For Trade
SOURCE– Russian oil sale profits (billions) are stuck in Indian Banks, marking a blow to Putin’s attempts to stop using US dollars for trade- like oil, gold, and wheat are typically traded using the US dollars. However, Russia’s financial system was essentially isolated by Western sanctions imposed after Russia invaded Ukraine, which made it unable to make transactions in greenbacks, hence limiting trade.
President Vladimir Putin has tried to sell oil to other countries- such as China and India in their local currencies, the yuan and rupee respectively. Putin’s fears that would undermine the strength of the US dollar abroad. China has also pursued to weaken the US dollar’s hold on world trade by calling on Gulf Arab leaders to allow oil and gas to be purchased in yuan.
The recent attempts to de-dollarize bilateral trade with India appear to have backfired on Moscow. Russia is one of India’s top oil suppliers. Russia earned billions of dollars in sales, resulted in an accumulation of up to $1B per month in rupee assets in Indian banks that cannot be accessed because of restrictions by the Reserve Bank of India that prevent Russian firms from transferring rupees stored in bank acct. in India to Russia and converting them into rubles. According to Russia’s Foreign Minister Sergei Lavrov, it is a problem because they need to use money. The rupees must be transferred to another currency. It was already been discussed about this issue with Indian Foreign Minister Subrahmanyam Jaishankar. As of now, the only option for Russia is to use the money in India. Aside from oil, Russia is also one of India’s top suppliers of weapons and military hardware.